*3.5.5 Applying VECM*

The VECM is a derivative model of VAR. The difference between VAR and VECM is the VECM estimations, particularly in measuring cointegration condition. If there is a cointegration relationship between variables, it indicates a long-term relationship [27]. VECM is often referred for non-stationary series that has a cointegration relationship. The VECM specification limits the relationship of endogenous variables in the long run to remain convergent in cointegration relationships, but still considers the existence of short-term relationships. The process for deciding on the VECM method can be seen in **Figure 2**.
